John Gibson

John Gibson of BMO Capital Markets asked for a geographic or basin-level breakdown of where the 22 rig upgrades are targeted and inquired about the number of idle Precision rigs remaining in the Haynesville.

Answer

CFO Carey Ford stated that the upgrades are primarily targeted for basins with strong demand and a significant company presence, namely the Haynesville, Marcellus, Montney, and Canadian heavy oil regions. President and CEO Kevin Neveu added that Precision still has a 'large, high single digits' number of rigs idle in the Haynesville.

John Gibson from BMO Capital Markets asked about conversations with producers and the specific commodity price levels that might trigger significant changes in capital spending plans in Canada and the U.S.

Answer

CFO Carey Ford provided his sense of the market, suggesting U.S. oil-directed activity is stable in the high $50s to low $60s WTI range. For Canada, he believes the threshold for customer concern is lower, potentially in the low $50s, due to the exchange rate and narrowed differentials. He cautioned that these are not hard thresholds provided by customers.

John Gibson requested details on international rig margins, the status of potential rig activations, and an update on day rates and margins for the Super Single rigs in Canada.

Answer

CFO Carey Ford stated that specific international margins are not disclosed but are better than mid-cycle North American margins. CEO Kevin Neveu added there was no news on international activations after an unsuccessful bid in Saudi Arabia. For Super Singles, he reiterated margin guidance of $7,000-$14,000/day, with pad-equipped rigs at the high end, and noted plans to convert more rigs to pad style.

John Gibson from BMO Capital Markets inquired about the quantifiable financial impact from the severe weather in Australia during Q1 and asked about the drivers behind the improving performance in the oil sands business.

Answer

Executive Jason Veenstra quantified the weather impact in Australia at approximately 5% to 7% of gross profit margin, or about a $10 million impact. Executive Joseph Lambert explained that the oil sands improvement is due to greater operational efficiency and strong demand, and he anticipates modest year-over-year growth in that segment.